10 Tips for Reducing Wokers' Compensation Costs

10 Tips for Reducing Workers’ Compensation Costs

FEATURING KNELL, O’CONNOR, DANIELEWICZ

June 8, 2017

Agenda

What We’ll Cover in Today’s Discussion

• Introductions

• History of Workers' Compensation

• What you need to know about Workers' Compensation: benefits

covered, state laws, etc.

• Direct and indirect costs

• Tips for minimizing costs

• Transitional duty

• IL WC costs

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About the Speakers

Webinar Host

Michelle Lanter Smith

Chief Marketing Officer

EPAY Systems

Featured Speaker

Bradley C. Knell

Knell, O’Connor,

Danielewicz

Featured Speaker

Nicole V. Russo

Principal

Knell, O’Connor,

Danielewicz

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Legal Disclaimer

The contents of this presentation should not be construed as legal advice or a

legal opinion on any specific facts or circumstances.

These materials are intended for general information purposes only, and you are

urged to consult a lawyer concerning your own situation and any specific legal

questions you may have.


History of Workers’ Compensation

First state based workers’ compensation laws enacted in 1911

Wisconsin – the first state to draft a constitutional workers’ compensation law

During the Industrial Revolution, WC laws were very restrictive, allowing employers to

claim 3 significant defenses:

Contributory negligence: Employer wouldn’t be held liable if worker was responsible for his own

injury

The “fellow servant” rule: If a fellow employee caused the worker’s injuries, employers were not

held liable

Assumption of risk: Employees accepted hazards of their work when they signed contracts.

(Many industries had employees sign contracts that relinquished their right to sue for injuries.)


History of Workers’ Compensation


What is Workers’ Comp Insurance?

• Workers' compensation is a form

of insurance providing wage replacement and

medical benefits to employees injured in the course

of employment in exchange for mandatory

relinquishment of the employee's right to sue his or

her employer for the tort of negligence.

• Workers' compensation benefits do NOT cover pain

and suffering.


Evolution to a “No Fault” System

• In modern times, workers' compensation evolved to allow employees injured at work

to obtain payment for lost wages, medical costs, and occupational rehabilitation

expenses without regard to their personal negligence or fault.

• Unlike in a contributory negligence scenario, this means that there does not need to

be litigation over who is to blame for the accident that led to the worker’s injuries.

• Example: Bob, a janitor, spills cleaning solution and slips on a puddle, injuring his

back. Despite the injury being caused by Bob’s own carelessness, he is not

precluded from making a claim for workers’ compensation benefits.

What Benefits are Covered?


• Medical Treatment

• Lost Wages (Temporary Total Disability)

• Permanent Disability Benefits

(Often based on a disability schedule)

• Rehabilitation/Vocational Re-training

• Death Benefits

Businesses are, by law, 100 percent responsible for providing workers'

compensation benefits and cannot charge a worker for benefits provided

under workers' compensation or for any portion of the business's workers'

compensation insurance premium.


Is Coverage Mandatory?

Texas is the only state that does not require employers

to have workers’ compensation coverage.

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State by

State

Benefit

Comparison

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Why is Workers’ Comp So Costly?

• Medical services usually billed at higher rate than private health

insurance plans and government funded insurance plans

(Medicare and Medicaid)

• States that have a low burden of proof for compensability

• Work injury only need be “a” cause, not primary cause

• Preexisting conditions are not excluded

• No credit for back injuries, prior wage loss

• Medical providers take advantage and establish referral sources to over

treat and inflate case values


Direct Costs + Indirect Costs

Direct Costs

• Medical Expenses for Injured Worker

o Emergency Room

o Office Visits

o Diagnostic Imaging

o Physical Therapy

o Surgery

• Compensation for Lost Time From Work

• Lump Sum Award of Permanent Disability

• Vocational Re-training


Indirect Costs

• Investigation of Alleged Injury

o Supervisor time for completing reports

o Obtaining witness statements

o Surveillance

o Background checks

• Expense of Hiring New Employee to Fill Injured

Worker’s Position

• Increase in Insurance Premium Due to Claim Filed

• Safety Training or Development of New Safety Practice

Direct Costs + Indirect Costs

Poll Question


Top Tips for Minimizing Costs

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Document, Document, Document

• Take a thorough written statement as soon as possible after

the alleged accident

• Consider retaining an independent vendor to conduct a

private accident investigation report.

o Interviews with witnesses

o Written statements from co-workers and supervisors

o Photographs of the alleged accident location

o Investigation of third party subrogation potential

o OSHA or safety investigation

o Police reports filed

Top Tips for

Minimizing Costs:

INVESTIGATE-

Early and

Thoroughly


• Obtain a medical canvass in cases where causation is in

question

o For a flat rate, the canvass will contact providers in a set geographic

radius to determine if claimant has previously treated at the facility

• Determine if any surveillance footage documenting the

alleged accident occurring exists, and compare it to the

described mechanism of injury


Continued…

Top Tips for

Minimizing Costs:

INVESTIGATE-

Early and

Thoroughly

Video: Woman Fakes On the Job Injury

http://www.fox13news.com/news/251957807-video

http://www.fox13news.com/news/251957807-video

• Descriptions of injury change, so obtain a detailed

statement as soon as possible after the alleged accident

• Once other parties are involved, the history of injury can

and will change, so it is important to document a detailed

history of injury and specifically the alleged mechanism of

injury

• Secure the statement (in writing) before family, friends, co-

workers, medical providers, and ATTORNEYS get involved

Top Tips for

Minimizing Costs:

DOCUMENT YOUR

FILE - Early and

Often


Develop a list of trusted IME doctors

• The choice of IME doctor is one of the most important parts of

the case, because you are usually bound to that opinion for

the duration of the claim

• Chose wisely…a “good” report from a bad doctor will be of

limited value as litigation progresses

• Be cognizant of the IME doctor’s expertise and credentials in

comparison to the treating doctor. You always want to have

your expert comparable or more qualified that the treating

doctor

• Know how well your doctor will hold up during testimony if you

think the case will proceed to trial

Top Tips for

Minimizing Costs:

CREATE A

NETWORK OF

MEDICAL

PROVIDERS


• Provide your doctor with a strong arsenal of tools to enhance his/her

credibility

o Written job description

o Prior treatment records

• Consider assigning nurse case management early on during treatment

even on an accepted claim

o They can hold treating doctor accountable for “off work” notes

o They can act as a liaison in states where limited or no contact with a claimant’s

treating doctor is allowed

o Will often facilitate a more expedited return to light and full duty

o Can coordinate detailed job video analysis for defense against repetitive trauma

claims


o Injury reports/statements

o Surveillance, if available

o Diagnostic imaging/films

Continued…

Top Tips for

Minimizing Costs:

CREATE A NETWORK

OF MEDICAL

PROVIDERS

• Utilize a Preferred Provider Program

o Some states allow employers to create Preferred Provider Programs (PPP)

for workers' compensation medical care.

o For example, in Illinois, if the Department of Insurance approves the PPP, it

counts as one of the employee's two choices of medical providers. If the

employee does not want to use the PPP, he or she must inform the

employer in writing. The employee can then go to one other medical

provider and that provider's chain of referrals.

• In states that do not provider for PPP, larger employers can

contract with local occupational clinics to refer injured workers for

local, urgent care.


Continued…

Top Tips for

Minimizing Costs:

CREATE A NETWORK

OF MEDICAL

PROVIDERS

Communication

• Maintain open lines of communication to avoid surprises

• Communicate with the injured worker (if he or she is not

represented) to remain informed about medical treatment plans,

anticipated return to work, possible work accommodations

needed

• Communicate with your carrier and defense attorney regularly

regarding case status and investigation.

Top Tips for

Minimizing Costs:

COMMUNICATI0N

IS KEY


• Conduct quarterly (or more frequent) claim reviews. This

will insure that the defense team develops a unified

strategy, will facilitate open communication, will insure that

the claim is advancing towards resolution, and will provide

an open forum for questions, concerns, feedback, and

updated information to be shared with the carrier, attorney,

and employer/supervisor.

• Identify potential witnesses early on and assess likelihood

of cooperation at trial, and potential for bias towards

petitioner

Top Tips for

Minimizing Costs:

COMMUNICATI0N

IS KEY


Safety Incentives

• Make Employees Accountable for Good Safety Practices

o Incorporate Adherence to Safety into Performance Reviews

o Incorporate Safety Violations into Disciplinary Policy

o Require Employees to Sign Safety Handbook

• Provide Incentives for Adhering to Safety Policies

o Offer monetary incentives, bonuses, and rewards for safe practices,

and low/no injury rates

o Provide company sponsored activities to reward safe practices

• Encourage Confidentiality Regarding Claim Settlements

Top Tips for

Minimizing Costs:

EMPHISIS ON

SAFETY IN THE

WORKPLACE


What is Transitional Duty?

• Transitional duty is temporary work that is offered the injured employee before he or she is

fully recovered. The idea is to work while the individual heals. Transitional duty should

always comply with the claimant’s medical work restrictions and should be a temporary

assignment leading to the employee’s normal job.

• Also referred to as light duty or modified duty

What is the purpose of Transitional Duty?

• The purpose of transitional duty is to ease the injured workers back into the workforce by

providing lighter duties as they recover, allowing them a faster return to productivity

without impeding recovery or risking re-injury.

• Studies have shown that transitional duty benefits both the injured worker and the

employer


Transitional Duty


Transitional Duty

Benefits to the Injured Worker

• The injured worker avoids being isolated

• The employee maintains contact with the fellow employees

• The employee does not feel guilty and increases his/her level of self esteem

• The employee acclimates more quickly to the full duty job

• He/she maintains a productive mindset and sees management’s commitment to their

well-being

• Odds of returning to full employment drop by 50 percent after just 12 weeks of

workplace absence

Benefits to the Employer

• By providing the injured employees the support they need to rehabilitate in the workplace, employers retain

the services of skilled, knowledgeable and experienced employees

o This can reduce the indirect costs of hiring and training replacements for the injured worker

• The employee must report to work rather than relax in the comfortable surroundings of their home

environment

• Communication between the employer and employee is enhanced, face-to-face.

• As the healing process speeds up, medical expenses from prolonged disability cases decrease exponentially

• Hiring and training costs for replacing the employee is eliminated

• Injured employees offered modified duties return to work twice as often as those who aren't and spend half

as many days on sick leave.


Transitional Duty

What if the Employer Cannot Accommodate Light Duty?

• Transitional Duty does not need to be a “job.” For instance, a grouping of tasks over

several hours or days may provide just the needed solution

• Ask managers in your organization to develop “wish lists” of tasks and jobs that they

need to complete but don’t have the personnel or time to complete them.

• Transitional Duty can be facilitated through volunteer work coordinated at an off-site

facility. Offsite transitional duty should be communicated to the employee as a

mandatory extension of his or her employment

o American Red Cross


Transitional Duty

o Goodwill o Local Shelter

• Workers’ Compensation Cost/Payouts are

assessed against the plant’s local office’s

operation cost.

• Eliminate or Mitigate Workers’ Compensation

costs to protect profit.

• Have an effective safety/risk manager that can

implement a viable safety program to prevent

Workers’ Compensation accidents.


IL Workers’ Compensation Cost to the Bottom Line

• In addition, have a reliable and consistent

occupational clinic that can treat workers

immediately after an accident; Why?

o Lock workers into an accurate and truthful medical

history; less likely to lie under duress;

o To reduce “overtreatment exposure”; hopefully you

control the initial treatment “chain of referral”; get the

worker to credible and effective medical treaters;

o Getting the workers back to work ASAP, thus

reducing TTD payout.



• Changing Workers’ Compensation Culture

o Goal should be to establish a “fair” but “tough” on Workers’

Compensation claims

o Teddy Roosevelt “Speak softly but carry a big stick”

o Example: 1) Minor injuries = settle on a pro se basis

o Example 2) fraudulent injuries = fight to the bitter end

• Have an effective TPA/Insurance program.



• Have effective counsel

o “Team” approach. Do they get along? Do they know your business?

o Have quarterly claim review with plant and TPA

• Use of surveillance?

o Appropriate when you have sufficient information, “not a shot in the dark”

o Providing surveillance to IME/MA’s

• Show up at the IWCC

o Sends a message to the IWCC and the employee that you care about W.C. Employees

talk!



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10 Tips for Reducing Wokers' Compensation Costs